We now turn to the criticism of the above opinions as given by the Russian Marxists.

In 1894, Peter v. Struve who had already given a detailed appraisal of Nikolayon’s book in an essay On Capitalist Development in Russia,⁽¹⁾ published a book in Russian,⁽²⁾ criticizing the theories of ‘populism’ from various aspects. In respect of our present problem, however, he mainly confines himself to proving, against both Vorontsov and Nikolayon, that capitalism does not cause a contraction of the home market but, on the contrary, an expansion. There can be no doubt that Nikolayon has made a blunder – the same that Sismondi had made. They each describe only a single aspect of the destructive process, performed by capitalism on the traditional forms of production by small enterprise. They saw only the resulting depression of general welfare, the impoverishment of broad strata of the population, and failed to notice that economic aspect of the process which entails the abolition of natural economy and the substitution of a commodity economy in rural districts. And this is as much as to say that, by absorbing further and further sections of formerly independent and self-sufficient producers into its own sphere, capitalism continuously transforms into commodity buyers ever new strata of people who had not before bought its commodities. In fact, the course of capitalist development is just the opposite of that pictured by the ‘populists’ on the model of Sismondi. Capitalism, far from ruining the home market, really sets about creating it, precisely by means of a spreading money economy.

Struve in particular refutes the theory that the surplus value cannot possibly be realized on the home market. He argues as follows: The conviction that a mature capitalist society consists exclusively of entrepreneurs and workers forms the basis of Vorontsov’s theory, and Nikolayon himself operates with this concept throughout. From this point of view, of course, the realization of the capitalist aggregate product seems incomprehensible. And Vorontsov’s theory is correct in so far as it states the fact that neither the capitalists nor the workers’ consumption can realize the surplus value, so that the existence of ‘third persons’ must be presumed.⁽³⁾ But then, is it not beyond any doubt that some such ‘third persons’ exist in every capitalist society? The idea of Vorontsov and Nikolayon is pure fiction which cannot advance our understanding of any historical process whatever by a hair’s breadth.⁽⁴⁾ There is no actual capitalist society, however highly developed, composed exclusively of capitalists and workers.

‘Even in England and Wales, out of a thousand self-supporting inhabitants, 543 are engaged in industry, 172 in commerce, 140 in agriculture, 81 in casual wage labor, and 62 in the Civil Service, the liberal professions and the like.’

Even in England, then, there are large numbers of ‘third persons’, and it is they who, by their consumption, help to realize the surplus value in so far as it is not consumed by the capitalists. Struve leaves it open whether these third persons consume enough to realize all surplus value – however that may be, the contrary would have to be proved’.⁽⁵⁾ This cannot be done, he claims, for Russia, that vast country with an immense population. She, in fact, is in the fortunate position to be able to dispense with foreign markets. In this – and here Struve dips into the intellectual treasures of Professors Wagner, Schaeffle, and Schmoller – she enjoys the same privileges as the United States of America.

‘If the example of the N. American Union stands for anything, it is proof of the fact that under certain circumstances capitalist industry can attain a very high level of development almost entirely on the basis of the home market.’⁽⁶⁾

The negligible amount of industrial exports from the USA in 1882 is mentioned in support of this statement which Struve formulates a general doctrine: ‘The vaster the territory, and the larger the population of a country, the less does that country require foreign markets for its capitalist development.’ He infers from this, indirect opposition to the ‘populists’, ‘a more brilliant future (for Russia) than for the other countries’.

On the basis of commodity production, the progressive development of agriculture is bound to create a market wide enough to support the development of Russian industrial capitalism. This market would be capable of unlimited expansion, in step with the economic and cultural progress of the country, and together with the substitution of a monetary for a natural economy. ‘In this respect, capitalism enjoys more favorable conditions in Russia than in other countries.’⁽⁷⁾

Struve paints a detailed and highly colored picture of the new markets which, thanks to the Trans-Siberian Railway, are opening up in Siberia, Central Asia, Asia Minor, Persia and the Balkans. But his prophetic zeal blinds him to the fact that he is no longer talking about the ‘indefinitely expanding’ home market but about specific foreign markets. In later years, he was to throw in his lot, in politics too, with this optimistic Russian capitalism and its liberal program of imperialist expansion, for, which he had laid the theoretical foundations when still a ‘Marxist’.

Indeed, the tenor of Struve’s argument is a fervent belief in the unlimited capacity for expansion of capitalist production, but the economic foundation of this optimism is rather weak. He is somewhat reticent as to what he means by the ‘third persons’ whom he considers the mainstay of accumulation, but his references to English occupational statistics indicate that he has in mind the various private and public servants, the liberal professions, in short the notorious grand public so dear to bourgeois economists when they are completely at a loss. It is this ‘great public’ of which Marx said that it serves as the explanation for things which the economist cannot explain. It is obvious that, if we categorically refer to consumption by the capitalists and the workers, we do not speak of the entrepreneur as an individual, but of the capitalist class, as a whole, including their hangers-on – employes, Civil Servants, liberal professions, and the like. All such ‘third persons’ who are certainly not lacking in any capitalist society are, as far as economics is concerned, joint consumers of the surplus value for the greater part, in so far, namely, as they are not also joint consumers of the wages of labor. These groups can only derive their purchasing power either from the wage of the proletariat or from the surplus value, if not from both; but on the whole, they are to be regarded as joint consumers of the surplus value. It follows that their consumption is already included in the consumption of the capitalist class, and if Struve tries to reintroduce them to the capitalists by sleight-of-hand as ‘third persons’ to save the situation and help to realize the surplus value, the shrewd profiteer will not be taken in. He will see at once that this great public is nothing but his old familiar retinue of parasites who buy his commodities with money of his own providing. No, no, indeed! Struve’s ‘third persons’ will not do at all.

Struve’s theory of foreign markets and their significance for capitalist production is equally untenable. In this, he defers to the mechanist approach of the ‘populists’ who, along with the professors’ textbooks, hold that a capitalist (European) country will first exploit the home market to the limit, and will only look to foreign markets when this is almost or completely exhausted. Then, following in the footsteps of Wagner, Schaeffle and Schmoller, Struve arrives at the absurd conclusion that a country with vast territories and a large population can make its capitalist production a ‘self-contained whole’ and rely indefinitely on the home market alone.⁽⁸⁾ In actual fact, capitalist production is by nature production on a universal scale. Quite contrary to the bookish decrees issued by German scholars, it is producing for a world market already from the word go. The various pioneering branches of capitalist production in England, such as the textile, iron and coal industries, cast about for markets in all countries and continents, long before the process of destroying peasants’ property, the decline of handicraft and of the old domestic industries within the country had come to an end. And again, is it likely that the German chemical or electro-technical industries would be grateful for the sober advice not to work for five continents, as they have done from the beginning, but to confine themselves to the German home market which, being largely supplied from abroad, is evidently far from exhausted, in respect of a whole lot of other German industries? Or that one should explain to the German machine industry, it should not venture yet upon foreign markets, since German import statistics are visible proof that a good deal of the demand in Germany for products of this branch is satisfied by foreign supplies? No, this schematic conception of ‘foreign trade’ does not help us at all to grasp the complexity of the world market with its uncounted ramifications and different shades in the division of labor. The industrial development of the USA who have already at the time of writing become a dangerous rival to Britain both on the world market and even in England herself, just as they have beaten German competition, e.g. in the sphere of electrotechnics, both in the world market and in Germany herself, has given the lie to Struve’s inferences, already out-of-date when they were put on paper.

Struve also shares the crude view of the Russian ‘populists’ who saw hardly more than a merchant’s sordid concern for his market in the international connections of capitalist economy, and its historical tendency to create a homogeneous living organism based on social division of labor as well as the countless variety of natural wealth and productive conditions of the globe. Moreover he accepts the Three Empire fiction of Wagner and Schmoller (the self-contained Empires of Great Britain, Russia and the USA) which completely ignores or artificially minimizes the vital part played by an unlimited supply of means of subsistence, of raw and auxiliary materials and of labor power which is just as necessary for a capitalist industry computed in terms of a world market as the demand for finished products. Alone the history of the English cotton industry, a reflection in miniature of the history of capitalism in general, spreading over five continents throughout the nineteenth century, makes a mockery of the professors’ childish pretensions which have only one real significance: to provide the theoretical justification for the system of protective tariffs.

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Footnotes

⁽¹⁾ Published in Socialdemokratisches Zentralblatt, vol.iii, no.i.

⁽²⁾Critical Comments on the Problem of Economic Development in Russia.

⁽³⁾Ibid., p.251.

⁽⁴⁾Ibid., p.255.

⁽⁵⁾Ibid., p.252.

⁽⁶⁾Ibid., p.260. ‘There can be no doubt that Struve’s attempt to refute what he calls the pessimist outlook on the analogy of the USA is fallacious. He says that Russia can overcome the evil consequences of the most recent capitalism just as easily as the USA. But what he forgets is that the USA from the first represent a new bourgeois state, that they were founded by a petty bourgeoisie and by peasants who had fled from European feudalism to set up a purely bourgeois society. In Russia, on the other hand, we have a primitive communist foundation, a society of gentes, as it were, in the pre-civilized stage which, though it is already disintegrating, still serves as a material basis upon which the capitalist revolution (for it is in fact a social revolution) can take place and become effective. In America, a monetary economy had been stabilized more than a century ago, whereas a natural economy had until recently prevailed in Russia. It should be obvious therefore that this revolution in Russia is bound to be much-more ruthless and violent, and accompanied, by immensely more, suffering than in America’ (Engels to Nikolayon, October 17, 1893, Letters ..., p.85).

⁽⁷⁾Critical Comments ..., p.284.

⁽⁸⁾ Professor Schmoller, among others, clearly reveals the reactionary aspect of the ‘Three Empire Theory’ (viz. Great Britain, Russia and the USA) evolved by the German professors. In his handbook of commercial policy (Handelspolitische Säkularbetrachtung), the venerable scholar dolefully frowns upon ‘neo-mercantilism’, that is to say upon the imperialist designs of the three arch-villains. ‘In the interests of a higher intellectual, moral and esthetic civilization and social progress’ he demands a strong German navy and a European Customs Union. ‘Out of the economic tension of the world there arises the prime duty for Germany to create for herself a strong navy, so as to be prepared for battle in the case of need, and to be desirable as an ally to the World Powers’ – which latter, however, Professor Schmoller says elsewhere, he does not wish to blame for again taking the path of large-scale colonial expansion. ‘She neither can nor ought to pursue a policy of conquest like the Three World Powers, but she must be able, if necessary, to break a foreign blockade of the North Sea in order to protect her own colonies and her vast commerce, and she must be able to offer the same security to the states with whom she forms an alliance It is the task of the Three-Part Union (Germany, Austro-Hungary, and Italy) to co-operate with France towards imposing some restraint, desirable for the preservation of all other states, on the over-aggressive policy of the Three World Powers which constitutes a threat to all smaller states, and to ensure moderation in conquests, in colonial acquisitions, in the immoderate and unilateral policy of protective tariffs, in the exploitation and maltreatment of all weaker elements The objectives of all higher intellectual, moral and esthetic civilization and of social progress depend on the fact that the globe should not be divided up among Three World Empires in the twentieth century, that these Three Empires should not establish a brutal neo-mercantilism’ (Die Wandlungen der Europäischen Handelspolitik des 19. Jahrhunderts (Changes in the European Commercial Policy During the 19th Century), in Jahrb. für Gesetzgebung, Verwaltung und Volkswirtschaft, vol.xxiv, p.381).